ESR AR 2019 EN

Financial Review 48 Focused REVENUE The Group’s revenue for FY2019 grew by 40.6% to US$357.4 million. This is driven by strong contributions from each of its segments. FY2019 Revenue by country 25% 23% 12% 6% 33% 1% China Japan South Korea Singapore Australia India FY2019 Revenue by Segment Investment Fund Management Development 34% 47% 19% Rental income increased by 58.8% from US$74.3 million in FY2018 to US$118.0 million in FY2019 mainly driven by consolidation of Propertylink from March 2019, and full year rental income contribution from RW Higashi-Ogishima DC property that was acquired in second of half 2018. Management fee income increased by 23.0% from US$135.6 million in FY2018 to US$166.7 million in FY2019 mainly attributed to contributions from the Group’s strong recurring fund management fee income base through establishment of new funds such as South Korea Core Fund, Japan Core Fund, RJLF III and India Fund; as well as consolidation of Propertylink. Construction income increased by 71.8% from US$40.7 million in FY2018 to US$69.9 million in FY2019 on account of the full year effect of construction revenue generated by CIP that was acquired in August 2018. Geographically, the Group’s revenue contributions from Australia market increased significantly as a result of acquisitions of Propertylink and CIP. In FY2019, Australia revenue accounted for 32.8% of the Group’s revenue compared to 16.2% in FY2018. China, Japan and South Korea markets accounted for 60.5% in aggregate to the Group’s FY2019 revenue. These markets collectively made up of 93.3% of the Group’s revenue. PATMI AND EBITDA 1 The Group delivered stellar growth in FY2019, registering a PATMI of US$245.2 million and EBITDA of US$549.1 million. PATMI and EBITDA increased by 20.8% and 42.9% respectively year-on-year driven by strong performance of each of its investment, fund management and development segments that form the three key pillars of the Group’s sustainable growth model. The Group recorded fair value gains on investment properties of US$226.1 million in FY2019 (2018: US$172.5 million). The increase primarily attributable to gains on investment properties under construction from our portfolio in China such as Qingpu Yurun; as well as Japan portfolio from Sachiura properties and RW Higashi-Ogishima DC. Newly acquired properties in FY2019 also contributed to the increase. Furthermore, the Group recognised higher fair value gain on its investments in joint ventures by US$28.0million and its investment funds by US$29.4million respectively. These are largely driven by new funds set up, as well as consolidation of Propertylink. The above increases were offset by higher operating expenses and finance costs. Operating expenses increased by 28.4% primarily due to higher staff and business costs such as professional fees supporting business expansions. One-off professional fees incurred related to legal advisory, due diligence fees and valuation fees associated with our listing on SEHK, setting up new funds, financing activities and M&A activities. During the year, the Group diversified its funding sources with the successful issuance of S$350 million fixed rates notes bearing interest 6.75% per annum in February 2019 (“S$350 million fixed rates notes”) and US$425 million fixed rates notes bearing interest 7.875% per annum in April 2019 (“US$425 million fixed rates notes”) under the Group’s US$2 billion Multicurrency Debt Issuance Programme; as well as new corporate loans, which contributed to increase in finance costs. Note: 1 EBITDA is calculated as profit before tax, adding back depreciation and amortisation and finance costs (net). EBITDA is a non-IFRS measure and is presented because the Group believes it is an useful measure to determine the Group’s financial condition and historical ability to provide investment returns. EBITDA and any other measures of financial performance should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net profit or indicators of the Group’s operating performance or any other measure of performance derived in accordance with IFRS. Because EBITDA is not an IFRS measure, it may not be comparable to similarly titled measures presented by other companies. Refer to non-IFRS measures reconciliation in page 240.